Regulation and Turbulence in the Portuguese Wool Textile Markets

This paper traces the changing contribution of small firms to manufacturing in Japan and the UK between 1972 and 1992. It shows that there are significant and important differences between the two countries, although in both cases small firms provided an increasing share of the total stock of firms over the period. In the UK however small firms also increased their employment share, primarily at the expense of large firms whilst in Japan their share remained constant. On of the most striking differences is the fact that in the UK only the very smallest micro businesses achieved a net increase in numbers, whereas in Japan all sizes of firm recorded an increase in numbers, albeit at declining rates by firm size.     

Japanese subcontracting at a crossroads

This paper examines the economic role of small business in Japan in the classic model of subcontracting vis-à-vis the novel model of networking. The Japanese economy can be characterized by an extensive system of subcontracting. There is an intensively elaborated point of focus on this Japanese approach to the technological and managerial aspects of subcontracting outside of Japan. Small and medium sized enterprises and big enterprises, in their endeavour to be effective and efficient, determine the characteristics of this system of industrial production. The characteristics of the subcontracting system in Japan are undergoing structural changes. The requirements concerning an accelerating technological expertise and marketing know-how of subcontracting firms will be adduced as a motive for the rapid industrial restructuring.     

The Evolution and Structure of Industrial Clusters in Japan

This paper focuses on two aspects of the evolution and structure of clusters in Japan, namely, what gives rise to clusters and what benefits are acquired by small firms from participating in clusters. The determinants of clustering are discussed by way of a review of the history of 14 industrial clusters which cover a wide range of industries and locations in Japan. It is noted that different factors dominate in different cases. Among the more important ones are the existence of leading large firms, the availability of a pooled labor market, and the presence of public research and testing facilities. The four most important benefits from clusters reported by small firms are : (i) specialization; (ii) ease of procurement; (iii) diffusion of technology, and (iv) public policy support. Access to skilled workers is not reported to be a significant benefit. This may be explained by the fact that the dominant source of skills acquisition among Japanese workers is on-the-job training and such skills may be too firm-specific to be useful to others, even within a geographically concentrated cluster.     

New business entrepreneurship in the Japanese economy

This article presents the results of a study focused on the role of new business entrepreneurship in the Japanese economy. Particular attention is paid to the activities of various government agencies in relation to new business entrepreneurship and to the barriers to this activity in Japan. New business entrepreneurship was defined as the formation and rapid growth of a business enterprise through unique approaches to the firm's activities.In contrast to the American stereotype of Japan as an economy of a few large, interconnected firms, it is, in fact, characterized by small- and medium-sized enterprises. Over 99% of all Japanese enterprises are categorized as small or medium and over 80% of all employed Japanese are employed by such firms. However, very few of these firms are entrepreneurial in nature. The vast majority are small firms that are either subcontractors to a single larger firm or small retail, wholesale, or restaurant establishments.The start-up rate for all types of businesses in Japan has been declining for the past 10 to 15 years. More importantly, the rate of start-up s for independent firms, as opposed to firms started by a larger firm to serve primarily as a subcontractor, declined even more sharply. This indicates a significant weakness in Japan's otherwise strong economy.The low and declining rate of new business entrepreneurship in Japan is a function of structural, governmental, and cultural barriers. Structural barriers include an acute, long-term labor shortage, high financial start-up costs due in large part to high land prices, and a shortage of venture capital funding. Government barriers include “red tape,” financial and other support for small firms that is withdrawn as they enter rapid growth, and the persistent protection of inefficient industry structures. Cultural barriers involve Japan's strong group/collective orientation, the traditional career path in Japan, bounds on creativity, and the fact that entrepreneurship is not assigned a high social value.While the government provides an extensive, well-developed network of services for small- and medium-sized firms, these programs are not designed to facilitate rapid growth into the large firm phase. The Japanese experiences and programs offer useful insights for policy and tactics by other governments.     

日本跨国公司生产外移与其国内经济持续萧条的关联性分析

日本跨国公司20多年的全球高速扩张把大量生产资源转移到国外,对国内中间产品订货量的减少造成了与大型跨国公司配套的日本中小企业产出的需求不足,使占日本70%的中小企业出现经营困难,动摇了日本传统的以“株式会社”为主的产业结构根基。另外跨国公司的高速扩张增加了大型企业对日本国家经济的控制力,日本政府的国家经济干预能力随之减弱,面对多年的经济萧条而难有大的作为。     

The re-emergence of small-scale production: An international comparison

During the 1970s the long standing trend towards centralisation in the organisation of business ceased, and was reversed in many advanced industrialised countries as the share of employment in small enterprises and establishments began to increase. The article documents the important developments in the size distribution of production of the six largest OECD countries, and examines various explanations for the changes, such as the business cycle, the sectoral recomposition of the economy, labor cost advantages in small firms, and the spread of flexible specialisation. It also discusses potentially unfavourable effects of these changes on wages, working conditions, and industrial relations, and proposes institutional reforms to mitigate, or avoid, such effects.On the basis of an analysis of the small firm sector in the larger economic, social, and institutional context it is argued that the individual small firm lacks sufficient resources to compete effectively with large firms. To overcome these deficiencies it either has to depend on resource transfers from large enterprises, i.e., on a foster relationship, or be linked to a community of small firms, such as the industrial districts in Italy, in which productive resource are jointly procured, developed, and utilised, commercial services shared, and intermediary institutions created to elicit and maintain interfirm cooperation. In this way small firms can become parts of big organisations, enjoy many of the advantages possessed by large firms, and consequently offer jobs of comparable quality.This paper is a revised version of the introductory chapter to The Re-emergence of Small Enterprises — Industrial Restructuring in Industrialized Countries, edited by the Authors and Michael Piore, and published by the International Institute for Labour Studies, Geneva, 1990. The paper draws heavily on country reports for Japan, the United States, the United Kingdom, France, the Federal Republic of Germany, Italy, Norway, Hungary and Switerland. The first six report are included in the book.     

Technological Progress by Small and Medium Enterprises in Japan

This paper examines various aspects of total factor productivity across different firm sizes in Japan. It shows that larger firms have higher total factor productivity levels and growth than smaller firms. There are, however, some exceptions to this pattern especially in the electric machinery sector where small firms tend to have the edge. The paper also finds that two distinctive characteristics of small and medium firms, the practice of subcontracting and the use of external patents, are positively related to total factor productivity growth while the availability of subsidized public loans is not.     

Knowledge relatedness and post-spin-off growth

In this article, we examine the effects of knowledge relatedness on the post-spin-off growth of firms spun off from industrial parent firms. We predict that growth is maximized when the knowledge base of the spin-off firm partially overlaps with that of its parent. This effect is due to learning: both too small and too great an overlap will inhibit growth, the first because limited knowledge overlap hampers local search and knowledge assimilation and the second because great knowledge overlap hampers the creation of novel knowledge combinations. The propositions are tested and confirmed using a sample of 54 industrial spin-off firms from Finland.     

Financial Analysis of Palestinian Industry Including Small Scale Firms

The study aims to explore the financial aspects of the Palestinian industry, and to investigate productivity and efficiency of small scale industry compared with large scale firms. In order to help policy makers in industrial planning in the new emerged Palestinian state. A special instrument has been used to collect the financial and quantitative data for the related manufacturing firms from a random sample of 215 Palestinian firms. The one way analysis of variance test was used to examine whether the mean scores differ significantly among scale sizes of the Palestinian industry concerning the selected performance measures. In addition, the Scheffe test was used as a post hoc comparison way to identify which scale size firms' performance differs than the other two scale sizes.The research revealed that small scale firms in Palestinian industry have higher labor productivity values than large scale firms, while large scale firms accomplished higher net profit margin compared to small scale industry. Creating an additional job in large scale Palestinian industry needs less cost than creating a job in small scale industry, and large scale firms have better opportunity in getting external financing than small firms.     

Participation in industrial training programs

Two questions suggested by the recent literature on the matching of workers and firms are examined. The first relates to differences in the proportion of workers that participate in industrial training programs in large and small firms. The second relates to the characteristics of workers who participate in such programs. The major finding of this study is that workers in large firms are more likely to participate in industrial training programs than similar workers in small firms; the large-small firm training program participation rate differential is less, however, among low productivity workers than among high productivity workers. Additionaly, workers with vocational training received outside of a work setting are just as likely to find employment in small firms as in large ones.This research was supported by the Office of Advocacy, U.S. Small Business Administration under SBA award number 8487-AER-84. The findings and conclusions are the sole responsibility of the author.     

Internal vs External Financing of R&D

The empirical evidence suggests that while small firms in United States, United Kingdom and Canada rely on internal funds for financing R&D, similar firms in Japan, Germany and France have access to bank loans. In this paper, we analyze the financial decisions of small firms willing to invest in R&D. We find that their high ratio of intangible assets, along with the high risk nature of their investments, can explain their inability to raise debt in external capital markets. We also show that financing R&D with bank loans might be feasible, especially, if banks are willing to monitor the investment activities of their clients.     

Modelling Small Firms' Decisions to Export – Evidence from Manufacturing Firms in Finland, 1995

In this paper, I model small firms' decisions to export by applying an existing model of the theory of diffusion of innovations and test the predictions of the model with data on Finnish SMEs. The model, incorporating so-called epidemic learning and rank effects, describes nicely the different phases of this decision-making process. The data used in the empirical analysis has been collected by interviewing directors of small industrial firms especially for this study. The results suggest, among other things, that the development of exporting in a small firm is particularly influenced by the language skills of the entrepreneurs, and that the smaller the firm, the faster is the adoption of the export strategy. In addition, the development of exporting has been faster in firms that have started exporting in the 1990s than in firms that began exporting before the '90s.     

Transaction Structure in Japanese Small Business Sector

An attempt has been made to examine some aspects of transaction structure of the small business sector in Japanese manufacturing. It has been found that there are some interesting findings in the industrial organization of the sector (1) In the transactions of intermediate goods with manufacturing, small businesses have more frequent transactions with other small businesses than with large firms. On the other hand, large firms have more transactions with each other than with small businesses; (2) The transactions between SMEs and large firms, and between SMEs themselves vary from industry to industry, depending on production/demand structure of an industry and product structure of its SMEs sector; (3) In engineering, such as electrical machinery and transport equipment, the intra-industry transactions from small businesses to large firms are great, suggesting a larger extent of subcontracting relationships. Also, textiles, clothing, and printing and publishing also have higher subcontracting transactions.The relationships are different between the two groups.     

On the Growth of Micro and Small Firms: Evidence from Sweden

The relationship between the size, age and growth rate of firms is examined for a large sample of micro and small firms in Sweden. These firms have between 1–100 employees and operate in a geographically concentrated area. Micro and small firms are dominant in the industrial structure and thus their growth patterns are crucial to the economic growth of the region. The period of study is of particular interest because it allows us to evaluate the effects of various regional development policy programs on the growth and formation of firms. The data is an unbalanced panel covering the period 1993–1998. We allow for the exit and entry of firms. The growth rate is defined in terms of the number of employees, sales and assets. In the estimation of the growth rate we control for various factors characterizing the sample firms, their capital structure, performance, human capital, and local labor market conditions. Our results show that the relationship between the growth, size and age of firms is very sensitive with respect to the method of estimation, functional form and definition of growth and size.     

The Uses of Business History

In the 1960s small computers emerged in the United States, based on the new semiconductor technology. Originally developed for use in industrial automation, they soon began to compete with the established mainframe computers. A number of British firms entered the new market, including diversified electronic goods manufacturers, enterpreneurial start-ups, and office machinery suppliers. The Wilson government saw small computers as a central element of industrial modernisation, and thus a part of its solution to Britian's economic decline. The Ministry of Technology was given twin objectives: to support industrial modernisation and to promote the British small computer manufacturers. However, US-built systems proved more competitive, and by the mid-1970s they had come to dominate the industry, with the few remaining British firms relegated to niche markets. The paper concludes that government involvement in the industry was well-guided, but ineffectual, and that organisational cultures were to a large extent responsible for the British companies' decline.     

Quantitative Evaluation of the Determinants of Export and FDI: Firm‐level Evidence from Japan

Using firm‐level data for Japan, this paper examines the determinants of the export and foreign direct investment (FDI) decision. We contribute to the literature by employing a mixed logit model, i.e. a multinomial logit model with random intercepts and random coefficients, to incorporate any unobserved firm heterogeneity and by paying special attention to the quantitative significance of the determinants. We find that while the impact of productivity on the export and FDI decision is positive and statistically significant, it is economically negligible. The effect of firm size, credit constraints and information spillovers from experienced firms is also small in magnitude. A quantitatively dominant determinant of the export and FDI decision is instead the prior status of firms in terms of internationalisation. In addition, the use of the mixed logit model enables us to find a substantial role of unobserved firm characteristics in internationalisation of the firm. These findings suggest that entry costs to foreign markets, which substantially vary in size across firms, play an important role in the export and FDI decision. In addition, given that the negligible effect of productivity and the dominant effect of prior status appear to be more prominent in Japan than in some other countries, this study helps highlight the uniqueness of Japanese firms.     

Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level

This paper documents how productivity varies with globalization modes, based on a firm-level data set covering all manufacturing industries in Japan without any firm-size threshold. Only a small fraction of firms outsource, export, or invest abroad. Foreign outsourcers and exporters tend to be less productive than the firms active in FDI or in multiple globalization modes but more productive than domestic firms. This productivity ordering is robust even when firm size, factor intensity, and/or industry are controlled for. This paper also finds that outsourcers are on average less capital intensive than other globalized firms.     

The efficiency of small manufacturing firms in Japan

It has been suggested that market structure will have an impact on within-industry differentials in efficiency, or cost disadvantages of small firms. To test this hypothesis, this paper examines the effects of market structure on the productivity (relative to industry productivity) of small manufacturing firms in Japan. The results show that market structure elements such as concentration and capital requirements work to the disadvantage of small-firm efficiency. The findings provide support for the hypothesis.     

Firms size and R&D spillovers: Evidence from Italy

The recent emergence in the industrial organization literature of a wave of studies identifying small firms as more innovative than their larger counterparts poses something of a paradox? Where do small firms get their knowledge generating inputs? The purpose of this paper is to link innovative inputs to innovative outputs. This enables the identification of the extent to which spillovers exist from major sources generating new economic knowledge, such as the research and development (R&;D) laboratories of private and public firms, as well as universities, to the innovative activity of large and small enterprises. Based on twenty Italian regions over a period of nine years, the emprical evidence suggests that, while firm R&;D expenditures contribute to the generation of innovative output for all firms, as well as for large and small firms, the spillovers from university research are apparently more important for small-firm innovation than for large-firm innovation.     

Entry of Small and Medium Enterprises and Economic Dynamism in Japan

In examining the evolution of small and medium enterprises in Japan in the postwar period, this paper shows that entry rates for new firms have declined sharply in the last quarter century or so, a trend observed across most sectors of the economy as well as across most firm-size categories. To explain this pattern, the paper investigates the determinants of entry in Japan. Among other factors, it finds that cost disadvantages owing to small scale and the shortage of technical resources are significant deterrents to entry. It also finds that the availability of government-directed credit deters entry which suggests that, in their current form, such credit programs protect incumbents. Among positive factors, it finds that subcontracting opportunities promote entry which suggests that the subcontracting system in Japan is open to newcomers and helps give them a foothold in the economy.